The real stories from inside the F1 paddock

Pause for a moment…

I’m sitting in the Admirals Club in Chicago, waiting for a flight to Austin and, while everyone is agonising about F1’s financial models (none of which will happen) unless some of the people round the sport change, I think we should spare a thought for the hundreds of people who are now without jobs because of these debacles, and their families. This mess means upheaval and crisis on a personal level as well, which the smug masters of the universe at CVC don’t get, or rather don’t care about. People in finance want to make huge wedges of cash but they get a little touchy when you point out what they do to real people. Spare a thought to for the suppliers who may get caught in the crossfire, their only crime being to do business with people who ended up not paying their bills.

As I have said in another post, the sport generates $1.8 billion a year. It is downright scandalous that this cannot support 11 teams, even without a cost cap.

Their main crime is wanting the kudos of touching the ‘glamorous’ skirts of F1, not charging up front for their goods and services, and now reaping the shit end of the stick. Been there, seen it, done it. It’s not nice.

It’s a bad business if it doesn’t create its own future – and that means growing talent in smaller teams by having full 24 car grids.

My 2c – let teams enter a single car if they wish, using a year-old chassis, and any engine. Let the team score drivers points, but not constructors. But pay them (& every other team) a fair share for participating – enough to balance supply & demand, & to fill the grid to 24 cars.
If a 1 car team wishes to enter a 2nd car, they have to build their own.

If there’s a space on the grid, any team can apply to run any driver in a 2nd/3d car, which competes without restriction.
The team’s normal number of entries score constructors points. All drivers can score drivers points – if the guest driver finishes ahead of a regular, they’ll be taking points from the team driver.
The extra car can earn entry fees & prize money – but it’s mainly about one-off sponsorship.
The promoter decides who gets to race: a local name or star will sell tickets, which benefits everybody.

& all of this grows the market for team personnel – which is a good thing.

As you say, until the business owners change their thinking, nothing can change.

It’s so disgraceful. Been a fanatic for over fifty years and I’m seriously losing the desire to watch it anymore. Whatever happened to the spirit of the sport, where it meant something to win, not to be the one with the fattest wallets? It was the small teams that made the sport what it is, it will be the small teams who will see it expire.

hear, hear…completely agree with you Alan – I fail to feel as excited on a Sunday before a race as I once did. Knowing my interest will help fuel the greed and wealth of such despicable characters as those outlined above does not sit well with my conscience. Some profit is good, profit above all else is a path to ruin.

“As I have said in another post, the sport generates $1.8 billion a year. It is downright scandalous that this cannot support 11 teams, even without a cost cap.”

I saw Jake Humphrey picked up on this line in your previous post and tweeted it. He described it as ‘sobering’.

I think it’s a question that needs to be put to Bernie and as many other head honcho’s as possible. “Why, in a sport generating $1.8 billion a year, can 11 teams not be comfortably supported, even without a cost cap?” Follow it up with – “That fact has been described as ‘scandalous’ and ‘sobering’ – would you agree with that?”

I’ve no doubt Bernie and others would avoid the question or answer in a way that was less than satisfactory, but surely it would be fun to see them squirm, if nothing else.

I suspect you’d ask this Joe, but how many of the accredited media would be brave enough to do so?

Unfortunately its the human condition, some amass enormous wealth while others are at the opposite end of the scale. ‘People in finance want to make huge wedges of cash’…to what end, to continue the vicious cycle of making more cash, not many want to do anything useful with it. I’ve never understood it, you can’t take it with you, do something useful with it, change lives, create a healthy sport etc….

> Unfortunately its the human condition, some amass enormous
> wealth while others are at the opposite end of the scale.

It’s only the human condition when society deifies raw capitalism and permits is needlessly cruel excesses. In the not too distant past, we already proved that a moderate version of capitalism can work just fine and work far better than all the known alternatives… but that only happens when we have a capitalist economy that operates under rules of decent behavior established by society. What doesn’t work is when you dismantle all the rules of decency in order to have a harshly capitalist society, rather than just a capitalist economy within the rules of a decent society…

So true RShack. Being rich, successful and powerful, doesn’t mean that one has to act like some selfish robber Baron. As with rights, so there are responsibilities, and with riches should come responsibility to act fairly and decently to those employed under one, this doesn’t seem to be the case with Caterham or Marussia.

What’s crazy is that there is no reason why corporations must act this way. Lots of people believe that they are somehow forced to, but that’s just not true. Corporations are the creation of gov’t and therefore must play by whatever rules gov’t establishes.

There is no reason why corporations cannot be required to act in a responsible way. They will satisfy whatever requirements are imposed on them (or else their bosses will go to jail). The problem is an insufficiency of proper requirements, which in the US is largely due to the neanderthal anti-regulation, anti-gov’t hysteria of recent decades.

Like anything else people do, regulations (aka rules) can be done well or done stupidly. We don’t need to remove regulation (aka rules), what we need to do is have well-done regulation (aka rules).

Sadly, all that gets considered is “Regulation (aka rules), yes or no?” Which prevents us from doing the important thing: given the need for regulations (aka rules), how do we (a) have good ones and (b ) debug the ones that need debugging? In the absence of that, parasites and pirates get away with all kinds of rotten things, and for no good reason whatsoever.

Sadly ever since in mankind’s history after money was invented, there has always been a sector of humanity, regardless of creed, religion or ethnicity, who have always sought more and more, way beyond their own logical needs. Even when another $ can not possibly alter their lifestyle one iota……they want it, generally to the detriment of others in society.

Hi Joe
Totaly agree with you,there should be enough money to go around for all teams.There`s alot of suffering going on right here thats for sure,Its been a tough 2 weeks for us & getting harder……. Smudge

Joe, thanks for posting this. I don’t think the point could be made any clearer than your last sentence. It is simply amazing to me that they can’t get a mgmt focus on the long term health of the sport we all love, and preserve and protect it for the long term, instead of this short term rape and pillage approach that is destroying the show more each day. Three car Teams, big Teams forced to provide cars to the back marker Teams, what’s next, ONE Super Team providing all the cars and racing internally for the championship. Hope to see you in Austin, we’re always in Turn 12, you ought to come down and see a little from that vantage point as well. Enjoy our little big town of Austin. JRose

I have simply stopped watching the farce that is F1. I will not spend another dime on F 1. CVC has enough already, Bernie, whom I admired is nothing but a traitor to the cause. I am loving my motor racing more than ever, watching racing that I download from you tube where there is no DRS, Kers, whatever , and where drivers actually work hard to make a pass. I spare a thought for the families of Caterham and Marussia employees, and hope that Bernie and CVC never get another good night’s sleep.

My Vintage Auto Racing Association group’s (mostly 2002s and 510s) races are more exciting to watch. I’m thin and young and after 30 mins in cabins that reach 130+ I’m praying for the checkered flag. Not sure how the F1 guys do it! (they’re in world class shape that’s how.

Beyond the portion of 1.8 billion allotted to teams, I’d love to know the total amount of team sponsorship dollars floating around annually – particularly a graph showing spikes year-to-year. F1 does a shit marketing job. It’s obvious from the fact that besides Ferrari, RBR, MB and McLaren, there does not seem to be any significant sponsorship. I remember Brawn GP, despite their dominance, being essentially bare the entire season. Formerly mid-field Sauber has almost no real sponsorship.

Anyway, even in club racing the spending wars can be pretty staggering – budgets of well beyond 100k for 6-8 race season in a sedan class is not uncommon. That obviously doesn’t include the original cost of buying and building.

Fernando – check out MotoGP. I have been following it closely for the past 3-4 seasons and the racing is SO intense. The riders speak their mind, the team bosses do not dodge questions and the atmosphere is open and transparent. It has the aura of F1 from the 80s where commercial considerations are secondary and the presentation of the product less sanitised.

On behalf on all F1 fans around the globe, many of us who invest a significant amount of time and money following the sport we love, can you please corner anyone with influence in the paddock this weekend and tell them exactly what we all think?

Sounds ridiculous I know, but that’s the only avenue that I can come up with in order to get our point across…

They brought money. A bunch of it. They are involved because they bought it. Many are eager to blame CVC but they are doing what that type of company is meant to do. Extract as much revenue from the business as possible. Not good for F1 but no one should be surprised that an investment company is trying to maximize profits at the expense of others.

The common denominator is one Bernard Charles Eccelstone. Until he is no longer involved I doubt we’ll see any sort of structural or lasting change. That will require new ownership and management.

I agree with calling CVC, bloodsuckers since they do nothing for the sport. In US Football the owners all make a huge amount of money but first and foremost they care about the fans. The owners may not be likeable and are greedy however they know without fans they have no money.
CVC/Bernie are of the opinion if the fans/promoters don’t dole out money to them they don’t exist. A fan is only the person who has paid in full and in advance. Needless to say I sold my tickets to Austin and bought season tickets to the Dallas Stars which the owner and the team care about the fans (I also get about 100 hours of entertainment).
I am not sure teams without a good business plans going under is anything new to any sport.

I applaud your courage for being so transparent with your criticisms of CVC, Ecclestone, Ferrari, Red Bull and the FIA. At the heart of it all are parties who cannot compromise on how the excess of the sport is allocated. What they do agree upon, is a view that their interests and contributions take priority over everybody else. The concept of compassion has not existed for sometime now.

It is scandalous that cvc can take out the money like that but they put up the hard cash and took the risk and could’ve just as easily have lost it all. And if it was such a sure money making machine then the teams have to look a at themselves and ask why didn’t they have the foresight to bought it allforrthemselvess at the start. At the end of the day these things are self correcting, if the teams start falling left and right and the whole party comes to an end then what cvc owns will be worth nothing because it won’t generate 1.8bn anymore, maybe then the teams will be smart enough to buy it back from them this time….

Yes, they did pay for it. But they have borrowed against its future profits and put the sport in hock for years to come. I know it’s all perfectly legal and good finance, but what they have done with the sport is wrong.

Joe,
You blame all of this on the “suits” and “financiers”, which is like blaming the cat for eating the garden bird. It is Bernie who monetized the sport by selling it into the private financial markets and it was for his personal benefit. CVC is doing what CVC does, they are optimizing the return on their investment. CVC cares as much about F1’s long term health as the cat does the bird. Nobody should expect CVC (or Waddell & Reed) to care about F1 other than for what cash it could return to them, as that is not what they do. But the same cannot be said for Bernie Ecclestone who should have taken it upon himself to be the caretaker and guardian for the sport. He has failed in that regard, and he is at whom you should be aiming your quill (IMO)

it is wrong for the sport and totally greedy. I don’t think however we need to let others in the sport off the hook because there also lies blame with Bernie, FIA and the teams for not getting this sorted a bit more fairly and in a constructive and supportive way. I say shame on them all and never good for the image of the sport all this.

I agree what they are doing is not the most beneficial way for all the participants in the sport but I wouldn’t say its wrong, at least for this point in time, because of the profits they are generating. They could well be borrowing from the future to pay themselves now but as long as they haven’t manage to unload their equity stake to other suckers they could still come out as big losers. What they are doing might prove to be destructive to the F1 business as it is now, but it can never destroy the actual sport of F1 itself, because they’re not the ones that generate the value. The drivers don’t forget how to drive, engineers don’t forget how to build cars, and you won’t forget how to write, so you will just all get together again and start over. As long as there is a public demand for F1 racing, there will be a business case for it and it will always be there

No, it’s not necessarily self-correcting. That is the big lie. The idea that it all magically sorts itself out in a sensible way is just a fairy tale.

The most likely outcome is that CVC will have made out like very successful bandits, taking wagons of unimaginable riches with them, while leaving F1 a helluva lot worse for them having been involved. F1’s overcoming this will be in spite of CVC’s self-enriching role, not because there is some auto-correcting mechanism at work… and there will have been needless casualties along the way. There is absolutely nothing to recommend any of what the infamous Bernie/CVC partnership has wrought.

As you said, the sport generates 1.8 billion dollars, which means that it’s doing pretty well according to most people’s standards. Sure, F1 is living on the edge where teams occasionally go bust, but if that’s what it takes, so be it.

Thanks Joe, for recognising the difficult position a lot of good people at Marrusia and Caterham are now in.

As to all the other posts on the ruination and stealing of our sport you’ve all said it more articulately that I can. Perhaps PT summaries my feelings most accurately and succinctly. “Criminal”. Yes.. both literally and metaphorically!

Carnegie endowed libraries. From Wikipedia: “A total of 2,509 Carnegie libraries were built between 1883 and 1929, including some belonging to public and university library systems. 1,689 were built in the United States, 660 in Britain and Ireland, 125 in Canada, and others in Australia, New Zealand, Serbia, the Caribbean, Mauritius and Fiji.

At first, Carnegie libraries were almost exclusively in places where he had a personal connection. This would be Scotland and the Pittsburgh, Pennsylvania area. Yet this would change in 1899.

In later years few towns that requested a grant and agreed to his terms were refused. By the time the last grant was made in 1919, there were 3,500 libraries in the United States, nearly half of them built with construction grants paid by Carnegie.”

Never forget that, in addition to building the sport into what it is today (for better or worse), it is Bernie who monetized the sport by selling it into the private financial markets, through debt and equity sales, in order to put billions of cash into his pockets so that, among other things, his daughters could collect £50 million mansions like others collect shoes.

Hi Joe
Thanks for the information.
After spending considerable sums of money visiting the Singa, Malay, Australia and Silverstone for F1 races and encouraging a few of my friends to spend there money and join me, I have now lost all interest in F1.
I am tired of the money being pulled out of the sport and the short sightness of the “F1” community in the way they treat the supporters, fans and general paying public.
Is there an other sport where the top sports stars of their proffesion have to pay there own wages or bring in there own sponsorship to take part?

It gets harder for me to watch F1 unless its on pay TV and even then I fall asleep after 10 laps.

Joe thanks for your insight and I do like reading your travel experience, but F1 for me is finished too much greed and too much ‘corruption’ that I can no longer be part of or pay towards through my ticket price, too much politics and as you say, the “little people’ are suffering while the money greedy people keep there noses to the trough while ignoring us.

No fans, No supporters, more empty race tracks (no matter how the TV crews try to avoid the pictures of empty stands) no sponsorship, no money going to the top, maybe then they will wake UP and move on.

For me from now on its Le Mans the Classic Races and Touring Cars.
F1 Its not racing for me anymore

Bankers, investments analysts and investors are the source of such a large and disproportionate part of the world’s ills. How great it would be limit their power (and the endless corruption they so often comprise). Sigh.

It’s when Ferrari realises it’s going to be at the back of the f**king grid that the tone might change somewhat…

Or when Bernie dies. Let’s be honest, one gets the impression the collective apathy / lethargy of all stakeholders has more to do with a view of it being easier to prepare to catch the pieces when they fall than try to dislodge them with Bernie still in situ.

I am sure they’ve studied history intensely and are just as much in it for the short term as CVC/FOM. What other reason would there be for their back-door deals with BE? There are plenty of exceedingly bright people in F1 – maybe they believe that development has reached the top of the S-curve and that the golden age of motoring and thus motor racing is over.

Despite your best efforts, the sport is so lacking in transparency that I won’t hold my breath for any meaningful answers.

Furthermore, is F1’s decline in popularity in relation to motor-sports overall or is it symptomatic of a general malaise in that sector?

From the revenues generated all teams could be paid an annual guaranteed fee of $120m (approx minimum cost to go racing for a year), then any pat on the back fee for Ferrari/Mercedes/RedBull etc for turning up and then finally a championship prize fund.

This would, at least ensure all of the teams could afford to go racing plus helps justify the cost to the boards of Toyota/BMW/Honda etc when times are tough. This would maintain the status quo plus the integrity of the sport (all teams turning up to the races).

Could this be done whilst still maintaining a decent return for the owners?

Agree, Joe. My sympathies go out to all those at Caterham and Marussia affected by something not of their doing. I’ve faced redundancy 3 times; that’s bad enough, but at least you know where you are and the pay off you’ll get. These guys and gals are all in complete limbo. A whole lot worse.

Well said Joe. It’s a shame the mainstream media have been so quiet on this front.
Some of the teams have been using their suppliers as overdraft facilities for years, all seems to be part of the business plan.

thank you for that Joe
loyal suppliers left with the true threat of bankruptcy in huge turmoil as small company directors use their house as collateral against the business.
“LET THEM EAT CAKE” management

Smudge should be in one of the top teams by now, think he has spent enough years being buggered about by the bottom feeders! How many times can you be put in a position of a team going bust! As I said, Iv’e been there as well, it’s a worrying situation!

It’s worth remembering that there are a good number of circuits in dire financial shape as well, very few of them can survive independently of their own government assistance. No French GP, Silverstone on a knife-edge yet again, ironically it seems to be the most popular races with the biggest crowds that suffer the most.

So we have the teams and the circuits struggling in a sport generating $1.8b, madness.

Joe, kudos to you for speaking your mind on this sensitive subject and not pandering to the powers that be. I respect you for taking such a brave stance (and yes, given the individuals involved and the influence they hold, it is very brave indeed).

There is an easy fix to all problems, though. Someone buy the sport, take 10 percent promoter fee and use the rest of the money to pay the teams more, charge the race promoters less and buy the rights back from payTV. Such an easy fix, why can’t people see this?

I feel that the smaller teams should get significantly more money, and Ferrari should not be given special treatment. If the extra “Ferrari” money was given to the smaller teams over the past few years … Caterham and Marrusia might have survived!